The remaining provisions of the Companies Act 2006 (the Act) will come into force on 1 October 2009 when the Act will, at long last, be in full force and effect (subject to certain transitional arrangements).
The provisions of The Companies (Share Capital and Acquisition by Company of its Own Shares) Regulations 2009 (the Regulations), which make certain changes to the Act, also come into force on 1 October 2009.
Further, the regulations setting out Model Articles for public, private and guarantee companies come into force on 1 October 2009. These will apply by default to companies incorporated on or after that date, unless other articles are adopted in their place. This is therefore an appropriate time for existing companies to review their articles, especially where they are based on Table A and so do not necessarily dovetail with the provisions of the Act. Decisions will need to be taken as to whether to continue with Table A (subject to necessary amendments), adopt the Model Articles (with or without amendment), or move to tailor-made articles with provisions drawn from Table A and/or the Model Articles as appropriate.
Most of the relevant provisions of the Act and the Regulations relate to share capital and administrative matters. An overview of the key provisions now being brought into force is set out below.
- Directors' residential addresses: Directors will be able to use a service address (e.g. the registered office) instead of their home address for disclosure on the public records at Companies House (although their home address must still be supplied to the Registrar of Companies).
- Authorised share capital: A company limited by shares will no longer be required to state its authorised share capital in its constitution. The concept of authorised share capital is therefore abolished, except where a company has restrictions in its constitution. Under transitional provisions, existing companies will however continue to be restricted from allotting shares beyond the existing limit of authorised capital, which will be deemed to be incorporated in the Articles, unless and until such limit is varied or revoked by ordinary resolution.
- Allotment of shares: To allot shares, directors will generally need to be authorised by the company's articles or by an ordinary resolution of the company, as under existing legislation, and existing authorities will continue to be valid post 1 October 2009. Directors of a private company with only one class of share will have the power to allot shares without obtaining such authorisation, unless restricted from doing so by the articles. However, under transitional provisions, existing private companies will only be able to take advantage of this relaxation if they pass an ordinary resolution to that effect.
- Statutory pre-emption provisions on allotments of shares: The existing statutory pre-emption provisions under the Companies Act 1985 are being retained in substantially their current form, and existing disapplications of pre-emption rights continue to be valid post 1 October 2009. New rules on pre-emptive offers include (i) an alteration to the time when a pre-emptive offer commences (the offer will commence when it is sent, rather than received), (ii) a requirement to extend pre-emptive offers to shareholders in EEA states regardless of any requirement to comply with local securities laws, and (iii) a reduction in the minimum period for which an offer must be kept open for acceptance from 21 days to 14 days.
- Court approved reduction of capital: Where a company has passed a resolution reducing its share capital and has applied to the court for an order confirming the reduction (which it must do if it is a public company), a creditor can only object to such an application if he can show that there is a real likelihood that the reduction of capital would result in the company being unable to discharge the relevant debt or claim when it fell due.
- Reduction of capital by private company: In addition to court approved reductions, private companies will be able to reduce their capital by way of a special resolution supported by a solvency statement from directors (i.e. without obtaining court approval). It will be an offence for directors to make the solvency statement without having reasonable grounds for the opinions within it.
- Authority to purchase own shares: The maximum period for which a public company can be authorised by a shareholder resolution to make on- or off-market purchases or vary, or release its rights under, a previously authorised contract for off-market purchases, will be increased from 18 months to five years.
- Share premium account: The uses to which the share premium account can be put are being narrowed. Companies will still be able to apply the share premium account to pay up bonus shares and to write off the expenses of share issues and commissions paid on share issues.
- Redeemable shares: Provided that they are authorised to do so by the company's articles, directors will now be able to determine the terms and manner of any redemption of redeemable shares (previously such matters had to be set out in the company's articles).
- Authority to purchase own shares, consolidate and sub-divide shares, and reduce share capital: A company's articles will no longer need to contain enabling provisions to do any of these acts because a shareholder resolution at the appropriate time will be sufficient.
- Redenomination of share capital: Unless prohibited by its articles, a company will be able to convert some or all of its share capital into another currency by ordinary resolution.
- Treasury shares: The cap on the aggregate nominal value of shares held as treasury shares (previously 10%) is being removed.
- Memorandum and articles of association: The memorandum of association will no longer set out the objects of the company. The provisions contained in an existing company's memorandum will be deemed to be provisions of its articles, unless a company passes a resolution providing otherwise. A company's objects will be unrestricted unless specifically restricted by the articles.
- Change of name: A company will be able to include provisions in its articles enabling it to change its name without requiring a special resolution.
- Suspension of share transfer registration: The directors will no longer be able to suspend the registration of share transfers because share transfers must be registered as soon as practicable. Any conflicting provision in the articles will need to be removed.
Companies Act 2006 - implementation timetable
We have prepared a timetable showing the implementation dates of the various provisions of the Act.
View the implementation timetable (web page).
Companies House forms from 1 October 2009
Companies House has prepared draft forms for use from 1 October 2009. The final forms will be available by 1 October 2009 and will be accessible on the Companies House website.
View the Companies House website (web page).
Companies Act 2006 - other resources
The background to, and general information on, the Act can be viewed on the Department for Business Innovation and Skills (BIS) website. In addition, a Companies Act 1985 – Companies Act 2006 destinations table is available on the Office of Public Sector Information (OPSI) website.
View the BIS website (web page).
View the destinations table (83 page pdf).